Managing Change in the Water Industry: A Consultation Paper

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J. ISSUES FOR CONSULTATION

J1. In this paper, the Scottish Executive has set out proposals to legislate on water services in response to increasing competition in the sector. The paper also identifies a number of other issues where there may be a case for new legislation or for other changes to existing arrangements. These issues raise a number of important questions, some of principle, some of practice. The Executive invites comments on them.

Proposals for legislation

J2. In terms of the proposal to establish a new statutory framework for the water sector, comments on the following are invited:

• a licensing regime to ensure that new entrants to the market are fit and proper and are required to meet common standards.
• the classes of licences that would be appropriate.
• how to share out fairly the costs of operating a licensing regime.
• the practical controls necessary to safeguard public health where common carriage operates.
• arrangements for controlling access to the public water and sewerage networks in cases of common carriage.
• protecting the integrity of the networks by establishing that charges for access to the network should not take account of the cost of supplying different locations, but that otherwise network access charges should be broadly cost reflective.
• placing beyond doubt the water authorities' legal ability to allow third parties access to their networks.
• making new entrants to the market liable to criminal prosecution on the same terms as the water authorities in cases where they are responsible for having supplied water unfit for human consumption.
• defining the duties that should rest on the water authorities as suppliers of last resort and establishing a fair means of meeting the cost of discharging these duties.
• consideration of changes to the method of charges for treating trade effluent
• developing the statutory framework for the Scottish Executive drinking water regulation function.
• defining arrangements for resolving disputes between different water authorities and new entrants.

J3. In terms of amending the functions of the Water Industry Commissioner, comments are invited on:

• extending the Commissioner's remit to cover the customers of all water and sewerage providers.
• placing on the Commissioner the function of operating the statutory licensing system.
• establishing through a concordat for consultation of the Commissioner by the Director General of Fair Trading prior to the Director reaching any decision on a case relating to the Scottish water sector under the 1998 Competition Act.

Other issues

J4. The Executive recognises that increased competition has implications for the water authorities and their ability to compete effectively with potential entrants. In light of that, it invites comments on:

• reducing constraints on the water authorities ability to enter into joint ventures and streamlining the current system for securing Executive approval to such ventures.
• whether the role, composition, size and time commitment of water authority boards should be changed.

J5. The Executive believes that more radical restructuring options do not need to be revisited until the new legislative regime has been established.

J6. Comments on these points, and on any other points raised in this paper, should reach the Scottish Executive by Wednesday 4 September 2000. They should be sent to:

William Fleming
Scottish Executive
Rural Affairs Department
Water Services Unit
Area 1-H
Victoria Quay
EDINBURGH
EH6 6QQ

Tel. 0131 244 7217
Fax.0131 244 0259

e-mail: wsuchoice@scotland.gov.uk

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